Wednesday, November 19, 2008

This Week's Theme: Trends That Will StickOil Supply Is Limited, Demand Is Unlimited Today's "trend that will stick": despite the current "head fake" of $2/gallon gasoline, petroleum supplies are still limited/in decline even as 2 billion new consumers gear up for their share of the energy-intensive Western lifestyle of autos, heat, air conditioning, malls, office towers, etc.

Today's entry will be brief because oil analyst Matt Simmons has stated the above case better than I could in a quick PDF slideshow which was recommended to me by longtime contributor U. Doran:Understanding Energy Risk and Crisis.

Mr. Doran also recommended this detailed analysis from theoildrum.com website: The 2008 IEA WEO - Production Decline Rates. As always, there is a lot of cogent commentary by well-informed industry participants. The basic discussion is on just how fast production is declining.

Simmons effectively dismantles the optimists' arguments that oil will continue declining in price due to the global recession, and he also takes apart the optimistic view that there's nearly unlimited petroleum reserves in the form of tar sands, etc.

Even if you know all about Peak Oil or are a complete skeptic, I highly recommend this easy-to-read (lots of self-explanatory charts) 48-slide presentation by one of the industry's most astute and respected analysts. Bottom line: don't count too heavily on $2/gasoline when planning your future investments and actions.Since we're on the subject, here's my "head fake" chart yet again:

Rudolf C.An interesting essay on Josh Bell in the subway. I wonder, though: how many of those people didn't stop because they (at least in their own minds) didn't have a choice? The time chosen for the experiment was the morning "rush hour;" in the calculus of "should I stop to hear this beautiful music only to get chewed out for getting to work late?," I think many are going to be restrained from following their desires.

Among other things, I'm a recording engineer, specializing in classical music. Had Mr. Bell been playing in New York Penn Station when I passed through on my way to record a show, I'd probably have wung (okay, winged) a dollar coin into his case and kept going. Apprciating the music would have had little to do with it; fulfilling my responsibilities to my client would have had much."

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